China Probes 60 Drugmakers in Effort to Curb Drug Prices

July 5 (Bloomberg) -- China’s top economic planning agency
is investigating the costs and prices of drugmakers including
GlaxoSmithKline Plc, Merck & Co., Novartis AG and Baxter
International Inc. to improve the pricing system for medicines.

The National Development and Reform Commission will examine
27 companies for costs and 33 for pricing, according to a July 2
statement posted on the commission’s Evaluation Center of Drug
Pricing. The investigation is being done so that drug prices can
be adjusted in a more timely fashion, it said.

“This isn’t surprising as drug prices are often under
scrutiny from the NDRC,” said Jason Siu, a health-care analyst
with RHB OSK Securities Hong Kong Ltd. “It makes sense for them
to try to keep procurement costs low.”

A possible impetus for the commission to probe pricing and
costs of domestic and foreign companies was the publishing of
China’s national essential drugs list in March, which increased
the items on the list to 500 from 305, Siu said in an interview
yesterday. The study comes after the People’s Daily reported the
NDRC started an investigation into pricing of infant formula.

Drugs on the list are subsidized and purchased in bulk by
provincial governments. The items include what every hospital
should have on its pharmacy shelves, Siu said, and doctors are
urged to prescribe from the list as patients are more likely to
receive reimbursement.

Officials from the center will visit the companies between
July and October, according to the statement. GlaxoSmithKline,
Merck, Novartis, Baxter and Astellas Pharma Inc. are in the cost
part of the review, along with a number of Chinese drugmakers,
it said.

Chinese police started an investigation into the Chinese
unit of Glaxo, U.K.’s biggest drugmaker, a week ago. Senior
executives at the unit are suspected of “economic crimes,” the
police have said.

There is no link between the investigation and the NDRC
review, according to a person familiar with the matter.